Chapter III: Introduction (2)

The unloadings are made frequently on the banks of the rivers under little favorable conditions, by reason of the want of wharves; are very slow and occasion besides lamentable delays, very heavy expenses principally for the packages of great weight.

One of the causes which most determine the dearness of transport in Amazonia, is the supply of combustibles to the steamers, these latter taking in coal only at the port of departure in Belém or Manáos, and this being consumed, purchase wood fuel along the route just as they require it, and for a high price, subjecting themselves thus to the delays incident to loading, at times very great. Coal mines in the basin of the Caquetá have been discovered, but so far it has not been possible to derive any benefit from them, owing to the want of the necessary studies and analysis, which only now the Federal Government is beginning to have made.

For the betterment of this state of things the Federal Government also pretends to contract with a large public company for the establishment of coal depots and combustible oil, at the most appropriate points of the rivers on which the greatest movement takes place in the valley of the Amazon, so that the steamers may be supplied for prices according to a tabular statement previously approved for each year.

The descent of the floating material by the rivers is much less onerous, as the consumption of combustibles is thereby considerably diminished, thanks to the current which gives an easy impulsion to the floating material; the trips are notwithstanding slow, much time being lost in picking up cargo, almost exclusively rubber, on the banks of the rivers.

The irregularity in the navigation either due to the deficiency of the floating material or by the natural obstacles that the flooding of the rivers bring about, cause extensive prejudice, as it obliges the large cargoes of merchandise upon whose price high interest is collected and occasions them considerable loss of goods deteriorated by their remaining for a long time in sheds and by the damaging effect of heat and dampness.

From thence arises the lamentable dearness of life and the bad alimentation, with their evil results on the health of the inhabitants of those far-away-regions.

The retention in the seringaes of large stocks of rubber deprived of the means of transport must also not be forgotten and its coming simultaneously on to the market at certain times, being taken advantage of by speculators is an important cause of the fall in prices which affects the interests of producers to an appreciable degree.

Regularity and frequency in navigation, permitting successive and regular supplies of rubber would diminish in notable proportions the cost of production, since it would cheapen the cost of labor and avoid the great oscillations usual in the prices.

In order to obtain that desideratum it is not sufficient to create new lines of navigation nor to augment the number of floating material or better their conditions, but it is necessary to adopt certain complementary measures. Thus in the impossibility of preparing from the outset minute hydrographic charts, a measure which would require great expenditure; it were advisable in order to make navigation more secure to indicate by means of small light houses and illuminated buoys of acetyline, the dangerous points which it is desirable to avoid.

In order to obviate the difficulties created by the formation of sand banks, by the accumulation of trunks of trees, and of obstacles of all kinds, it is necessary that attention be paid constantly to the cleansing of the rivers and dragging them, in cases where the obstructions cannot be removed by other means and the construction of railways and wagon roads connecting the navigable points.

It would be of the greatest utility to bring about the extension and opening up of telegraphic lines joining the producing centres with the central markets, such measures would have the most beneficient results as much for the owners of seringaes as for the shipowners, these latter being once aware of such facilities would cause their ships to be directed to the points where they were required to discharge merchandise or take in rubber or vice-versa and thus avoid all uncertainty upon the advantages to be reaped from those trips, because of the want of knowledge of the cargoes that are being reserved for them, and those who are in contact with them in the markets where the product is sold may be advised as to the quotations and the market prices of the merchandise so that they may take advantage of the most favorable times for effecting their transactions.

The message presented by His Excellency Marchal Hermes da Fonseca, President of the Republic of the United States of Brazil on the third of May of this current year, made special reference to the services of the radio-telegraph in the territory of the Acre, expressing himself in the following terms:

“The three radio-telegraphic stations that have been contracted for in December of 1910, are now in full working order, those of the Rio Branco and Senna Madueira having been inaugurated in September of 1911 and in February of this year that of Cruzeiro de Sul, which besides speaking with those two and therefore with Manáos, communicates also with Iquitos in the Republic of Perú.”

In order to complete this very useful improvement ordered to be done in such a happy hour, there were also contracted for two other stations, one of these being in Xapury and the other in Tarauacá, places having a great future before them and already containing an appreciable population as well as a notable material development.

With the installation of those two stations, the territory will be perfectly well equipped in regard to the question of telegraphic communications.

As a consequence of the dearness and the difficulties in the means of transport we get the excessive rises in freight, which at times are equal to and are often greater than the value of the merchandise transported; the truth is that the crisis in rubber made them suffer a certain fall and we no longer see such a thing happen as that the shipowner pays for the price of his steamers in two round trips.

The dominating principle is that of liberty of commerce. In order to assure regular services on the principal rivers, the Federal Government as well as the Governments of the States of Amazonas and Pará subsidize certain companies whose tables of freight charges are approved by the Public Powers. That these are still very high is shown by the fact of competition which in certain lines takes place between the subsidized companies and private shipowners; the latter, however, not being able to go beyond the tariff tables of the former, they nevertheless obtain freights and passengers which proportion them high profits, demonstrating thus that the tables of freight tariffs of the subsidized companies are still a long way from the maximum of reduction.

The Commercial, Industrial and Agricultural Congress which took place in Manáos from the 22nd to 27th of February of 1910, considering this position, resolved to recommend to the Public Powers the remodelling of the actual freight tariffs principally in that part of them which relate to alimentary goods, necessary to the sustaining of the extractors of rubber and in the sense of their being substantially cheapened.

Even to-day one of the best businesses in the Amazonic regions consists in chartering steamers for trafficking on the rivers.

If the freight rates on the sections served by the subsidized lines are high, greater still are these on the less favored sections where the rapids of the rivers flowing among the seringaes, make navigation difficult, because in these latter there being no freight tables, they make the price according to their judgment, such prices of transport being contracted directly according to the circumstances of the occasion with the shipper, who has to pay the price as the masters of the steamers are pleased or resolved to charge.

The owners of seringaes subject themselves to the heavy burdens which they are bound to put up with, in the hope of escaping the damage that the retention of their produce for want of transport would cause them.

It is not only the fluvial navigation freights that are much too burdensome, for the freights for ocean navigation are also burdened with this grave defect and thus it is that despite the fact of the distance which separate Brazil from New York and from London, is only half that between the consuming markets and the east, the freights for the latter are incomparably less. It behooves the Governments of countries producing rubber in South America to come to an arrangement so as to confer adequate premiums on the navigation companies to Europe and to the United States, who cheapen their freights and cut down in a satisfactory manner the duration of the voyage.

INTERNAL MARKETS FOR RUBBER—ORGANIZATION AND WORKING—TYPES AND QUOTATIONS

Located in the centre of the most important rubber producing region of the world, Belém and Manáos, the capitals of the two great states of the north, are, in Brazil, the principal markets of that product. Nearly 90 per cent of the Brazilian exportation proceeds from there, the 16,000 tons of rubber which each of these markets export annually gives place to a considerable mass of business.

If it be true that the commercial transactions gyrate around equal quantities of rubber, Belém has the advantage over Manáos, because it is the seat of a great part of the large exporting houses that operate in the two capitals. Its geographical situation which permits of more rapid communication with the markets of the south, and with foreign ports, contributes also towards its greater commercial importance.

The uses and customs are identical in the two markets. Commerce obeys a rule above all unfavorable to the sellers who cannot put a value on their merchandise but are forced before all things to accept the price imposed by the buyers. That disadvantageous condition of dependency is the natural outcome of the deficient economic organization in the exploitation of the rubber industry in the valley of the Amazon. Reference has already been made in another place to the burdensome commercial relations between the seringueiros and the patrons or proprietors of seringaes and between the same patrons and the commercial traders. The same vices and defects are to be found in the relations between the commercial traders and the great exporting houses. Those latter, possessors of large capital and united together in the common interests, dominate the market, which, weakened by successive crises and always in a precarious state cannot oppose them an efficacious resistance.

That situation can only be modified in the case of the actual economic and commercial methods, which place in the hands of the merchant-trader all the responsibility of the conduction of business in the place, without at the same time arming them with the means of defence against unrestricted speculations.

The merchant-trader’s houses are the intermediaries between the seringueiros and the exporting houses. But, their principal function is that of furnishing the seringueiro during the year all the goods necessary to sustain him and his employes as well as supplying him with tools, utensils, wearing apparel and in fact, everything that may be necessary to his life in the seringaes.

This supplying is done on credit, that is to say, against the remittance of rubber produced by the borrower and which is sold on its arrival by the merchant-trader to the exporting houses.

The merchant-trader thus requires large capital so as to meet the engagements that he assumes in the market with the great and numerous supplies, which he is obliged to make.

It is incumbent on him also to transport the same for which he nearly always employs steamers of his own, in order to bring the merchandise to its destination in far-away regions, bringing back on the return trip the rubber collected by his aviados, i.e., his borrowers of the seringaes.

The responsibilities assumed become due on the occasion of the arrival of the cargoes of rubber. In fact, it is exactly at this moment that the merchant-trader is most in need of money, because besides the imperious duty of paying the amount of his debts and the immediate necessity which he has of furnishing new supplies to his clients the aviados, he has still yet expenses to disburse with the repair and fitting out of the steamers, which owing to the bad conditions in the navigation of the rivers return nearly always in a damaged condition; balances to pay to the seringueiros whose debts were relatively small or advances to make to those whose production was inferior in value to the supply sent, but who required a new resource under the danger of otherwise not being able ever to liquidate their debt.

Thus it is that the aviador or merchant-trader has no other remedy, but to sell without delay the rubber which has been consigned to him and that is the psychological moment for the decided action of the buyers.

Reduced as to number, well informed about the business and in the possession of daily and direct notices from the consuming markets, perfectly bound up to them by a question of mutual interest, they decide to make the price for the merchandise that is offered to them. It is not always that that price corresponds in reality to those of the foreign market, but the apprehension that seizes the merchant-trader that moved by their interests the buyers may resolve to retire the offer, does not permit him either to hesitate or resist. He hands over the merchandise with a small profit and not uncommonly with a loss.

Treating of an article which up till to-day has been produced in a quantity inferior to the necessity of the industry, whose price was kept up high, much above that which might be called a remunerative price, that inversion of the law of economics is a very curious one, because, in this case, it is not the producer who imposes the price, but the buyer who does so.

The difficulties which the merchant-trader had to fight against, have been increased lately with the advent of the “regatões,” a species of barter-commission travelers on the rivers. This trade is exercised by individuals acting for their own account or as agents of the merchants and who go up the rivers with merchandise, doing business at sight in exchange for money or rubber, diverting in this way a large part of the transactions until now exercised through the inter-medium of the merchant-traders.

The principal causes of the precarious position of the “aviadores” or merchant-traders are the lack of adequate capital and the want of banking facilities and other establishments of credit which might come to their aid.

The export houses, however, operate with the greatest firmness. They discount the drafts for the rubber bought, in the agencies of the English banks, and with the product of this operation pay the merchant-traders, and as these drafts are at 90 days sight, it is only after the rubber is sold in New York or in Liverpool that they satisfy their indebtedness, thus trafficking almost covered from any risk whatsoever.

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The aviador or merchant-trader receives the rubber by the weight which it shows at the moment of being unloaded; if the trip is a long one the shortage in weight of the rubber may be as much as 15 per cent; if, on the other hand, there has been no time, owing to the shortness of the trip, for such a thing to happen, it is certain that on its being magazined or stored-up, it will continue to =quebrar=, i.e., diminish in weight. Thus, therefore, it is to the interest of all parties concerned to sell it and export it as soon after its arrival as possible, which, however, does not mean to say that the question of shortage is not an element which comes into play in making the estimate of its value.

The classifying of the rubber is done upon the occasion of its sale, this being an operation which necessitates a long experience and practice in the knowledge of the article.

Two workmen with iron instruments which they call “gatos,” take hold of the skin (smoke-cured roll or ball) by the orifice which is left in its shape on its being made, at the same time that a third workman cuts it down the middle with a sharp instrument called a “traçado.” By this means it is easy to ascertain if the manufacture of the internal coatings or layers has been done with the necessary care, and if the weight has been affected by water, or by any other extraneous body.

If the rubber presents itself with an uniform aspect, perfectly smoked and sufficiently elastic, it is classed “fina.” If, however, any points present spongy parts proceeding from coagulation of the latex anterior to the smoking process, it is styled “entre-fina.” To the agglomeration of residue which congeals freely, the name of “sernamby” is given.

There is still the “borracha fraca” little elastic, whose mercantile value is put in the same category as “sernamby” and which does not come from the latex of the hevea.

This work being finished, the rubber is bought in accordance with the quotations of the day, based upon prices coming from England and from the United States, but as has already been explained, this quotation is not always respected.

There is another anomaly to which it is advisable to refer: whilst the “entre-fina” and the sernamby are quoted abroad at least at 200 réis and 1$800 réis less than the “fina” the markets of Belém and Manáos show a difference of 800 réis and 2$000.

There are other abuses which also take place in the classifying of the rubber, which gives as a result that the buyers prefer to do business upon inferior qualities, because these offer a larger margin for profits.

The rubber is exported in American pineboxes which can hold nearly 150 Kilos. The dearness of manual labor in the Amazon territory makes it difficult to take advantage of the innumerable species of timber-woods in which the valley of the great river is so abundantly rich.

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In the remaining markets of the country where the rubber is negotiated, the price is regulated by the quotations in Pará. These local markets are of little importance and in nothing do they distinguish themselves as to the relative transactions in rubber, from the general mass of business. The class of =aviadores= or merchant-trader does not exist. Each producer sends his stock to his agent or representative or sells it to the first buyer. The rubber is collected from either maniçoba or mangabeira.

In the commerce of those products, the markets of Bahia and Fortaleza stand out the most prominently, to which places a certain appreciable portion of cultivated plantation rubber converges every year besides a great quantity of native rubber.

ECONOMIC AND FINANCIAL IMPORTANCE—FEDERAL AND STATE REVENUE—EXPORTATION TAX

The most superficial examination of the actual economic position of Brazil demonstrates at once and in an incisive manner how important the rubber industry is to the national life of the country.

Possessor of the innumerable riches distributed by the three Kingdoms of Nature, it is almost exclusively due to the cultivation of coffee and to the extraction of rubber that Brazil owes its extraordinary commercial development in these last twenty years.

The great fortunes which the plantations of the famous red-bean of the coffee-tree created in the South and the considerable profits which the exploitation of the precious gum have produced in the North, were certainly the causes which most influenced the development of the production to such an extraordinary degree, relegating to a much lower schedule in the general tabular statement of Brazilian exportation, all the products, whose commerce although certainly remunerative, does not show such certain and speedy results.

The general exportation of Brazilian merchandise was £63,724,440 in 1909, £63,091,547 in 1910 and £66,838,982 in 1911. To these totals, coffee and rubber contributed during each of the same three years £52,401,276, £51,342,278 and £55,458,221 respectively—totals these, sufficient by themselves, to guarantee with advantage the Brazilian international commercial equilibrium, when it is seen that in those said same years, the general importation of merchandise amounted to £37,139,354, £47,871,974 and £52,798,016.

Rubber contributed to the general total of exportation with 29.70 per cent in 1909, 39.06 per cent in 1910 and 22.53 per cent in 1911, or in other words an average of 30.43 per cent per annum. It is worthy of note, that the great difference which took place in the above-mentioned percentages is explained in the fluctuations in the prices of rubber, since the production not only did not decrease, but, as a matter of fact, increased from year to year. Therefore it is seen that nearly one-third of Brazil’s export trade is supplied by rubber, and it is nearly twenty millions of pounds sterling that Brazil receives every year, and which goes far to provide for the sustentation, not only of the population of the Brazilian Northwest, comprised in the great States of Pará, Amazons and Matto-Grosso and the Federal Territory of the Acre, but for the prosperity of the North-east States, which get the benefit of a good part of that sum through the intermedium of their sons, who live by the exploitation of the rubber; the Southern States benefit in their turn by the abundance of money in the North, that most secure guarantee of their prosperity, since that being producers of cereals, xarque, coffee, sugar, textile goods, hats and shoes, for a long time already they have constituted themselves the principal furnishers of food-stuffs and wearing apparel to that region. Finally there is still to be considered the benefit to be brought indirectly to the whole country because that sum goes to increase the commerce of importation, thus powerfully augmenting the Federal Customs Revenue.

The sum obtained by the States of the Amazons and Pará and by the Federal Territory of the Acre, is also considerable every year by the tribute paid on the rubber going out.

This last Territory of the Acre, since its incorporation with Brazil by the Treaty of Petropolis concluded with Bolivia in 1903, cost the Union (including the expenses incident to the acquisition of the Territory and other resulting compromises of the said treaty, such as the arbitral Tribunal, loans to Bolivia, marking out of the frontier, construction of the Madeira-Mamoré Railroad and expenses for the mobilization of troops, etc.), up till 1909 the sum of Rs. 62,595:562$038; the revenue brought in during the same period attained the sum of Rs. 58,052:757$012, in 1910 moreover the tax upon the rubber produced was Rs. 19,867:529$159 and in 1911 Rs. 9,671:711$068, or in other words Rs. 29,539:240$227 more, which should be carried to the credit of that very rich region. The rubber of the Acre is exported through the intermedium of the markets of Belém and Manáos, the impost-tax of 20 per cent ad valorem being collected on the occasion of its shipment.

The States of Amazonas and Pará cannot dispense quickly without very serious economic disturbance with the revenue receivable from the tribute paid on the exportation of rubber. As a matter of fact, the State of Amazonas collected the sum of Rs. 16,845:585$063 in 1909, Rs. 18,069:162$372 in 1910 and Rs. 12,901:477$379 in 1911; the impost-tax upon rubber brought in those same years respectively Rs. 13,316:487$569, Rs. 14,836:235$238 and Rs. 9,999:031$526, which can also be reckoned by 79.04 per cent, 82.11 per cent and 77.50 per cent.

The State of Amazonas taxes rubber produced in the State itself, in 18 per cent ad valorem, and that coming from the Javary, the boundary river with Perú, in 7 per cent.

In its turn Pará has had in the form of revenue collected in those years, the amounts of Rs. 19,039:709$531, Rs. 20,255:070$604 and Rs. 14,480:716$176, the import-tax on rubber rendering Rs. 14,602:759$269, Rs. 14,701:894$955 and Rs. 9,518:716$267, or 76.69 per cent, 72.58 per cent and 65.73 per cent.

The taxes charged by Pará are 22 per cent ad valorem for Rubber “fina,” “entre-fina” and “sernamby,” and 15 per cent for whatever other kind. Besides those there is an additional tax of 2.5 per cent in benefit of the Santa Casa de Misericordia charged on the exportation taxes.

These figures seem to show the importance for those States of questions concerning the production and consumption of the world’s rubber, and with greater reason still for Brazil as a whole. The ruin of one of the most promising regions on the face of the globe, the profound depreciation of Brazilian finances and the dreaded commercial crisis with which the country would have to fight, would be the disastrous effect of the indifference of the Federal and States Governments on such a matter. But that, however, is not the attitude of those Governments; they are decreeing various measures now in course of being carried out and which after minute studies were judged necessary, so that Brazil might continue to maintain her proud position of importance for the precious “black gold” (rubber) in the world’s market.

RUBBER-CONSUMING MARKETS—COMPETITION OF OTHER RUBBER-PRODUCING COUNTRIES

New York, Liverpool, London, Hamburg, Antwerp and Havre are at the present time, by their order of importance, the principal world’s markets for rubber.

New York, by virtue of the extraordinary development of North American industries, which in a steadily increasing scale, are consuming constantly greater quantities of raw material, receives almost half of the rubber produced in all the world. Nearly 60 per cent of the rubber negotiated in New York is Brazilian. After this follow Central America and Mexico; but as rubber proceeding from all parts appears in the New York market it is evident that there is no specialty in this business.

Liverpool, perhaps due to the fact of its being the port to which the lines of navigation that run to and from the Amazon are directed, has become the European emporium for Brazilian rubber. In fact, 40 per cent of the Brazilian production is directed towards that city. Liverpool also receives rubber of various qualities proceeding from the English and other European possessions in equatorial Africa.

The increasing production of the Oriental plantations finds in London one of its principal markets for the precious gum. Although rubber proceeding from different parts appears in the market, it may be affirmed without hesitation, that London is the special centre for cultivated refined rubber (plantation) which is easily explained by the fact that the owners of the extensive plantations in the Malay States are nearly all of them London companies.

Occidental and Oriental Africa, principally German Colonies, send to Hamburg the greater part of the rubber which is negotiated on that market. Brazil enters with about 20 per cent of the total amount of the business.

Antwerp owes its rubber trade to the creation of the Congo Free State, whose production, now in decline, is practically all directed to this city. It also receives rubber from Brazil, and seeing that Belgian capital is employed in the Oriental plantations its future is promising.

Havre, on the other hand, is of greater importance to Brazil; where 75 per cent of the transactions are in Brazilian rubber. It also imports the Congo species, as also those of some of the French Colonies in Africa. However, the great bulk of the production of these latter colonies is directed to Bordeaux.

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The methods of sale adopted in these markets, vary very much. From the slow old-fashioned process of sale by private treaty, to sales on time terms, passing through auctions and underwritings, in short all the commonly known modes of negotiating are in use.

The most important market, that of New York, adheres to the old-fashioned method of personal contracts for immediate delivery, which certainly serves better the interests of buyers, than those of sellers; the agitation that was created round this question with a view to reform the market, gave no result whatsoever.

Liverpool presents us the polymorphic type. Private sales, and sales on a fixed day for delivery, or sales by auctions, all take place, consulting thereby the preferences of both sellers and buyers, and establishing the free course of the values. The same happens in London, where, however, the Plantation companies have initiated more advanced transactions, such as sales of crops in anticipation.

Hamburg and Antwerp also practice sales by auction and on delivery. However, in this latter the method of underwriting is that most in vogue and which among all the processes is the one that consults most the interest of the seller. This is carried out in the following manner: A broker advertises a certain quantity of rubber for sale, the particulars of which he supplies (name of seller, weight, quality, estimated price, etc.), about twenty days beforehand. On the day appointed, he receives the offers of purchase closed and sealed; these are then opened in a public place and the prices are inscribed on a schedule divided into columns, each one headed with the name of the house offering. Once this operation has finished, the rubber falls to the highest bidder. The seller has, however, the right to withdraw the goods in case the price that results does not satisfy him.

The Antwerp market adopted this system with the view to competing against cognate markets. As the reducing of the expenses on the product, which corresponded to frs. 2.60 per 100 Kilos, the same being frs. 4.93 and frs. 7.30 in Hamburg and Liverpool respectively, did not suffice, it endeavored to attract the seller by offering the most advantageous prices, and it seems that it has succeeded in its desideratum.

Havre followed its example and it is greatly to be desired that all the rubber markets adopt the same system, not only for the reasons set forth, but also because it is a safe precaution against the manipulations of speculators.

Brazil has always maintained its predominating position in the world’s market for rubber, not only as the greatest producer, but also as the producer of the best quality.

In 1827, the first year about which statistical data exist, Brazil exported 31 tons of rubber; in 1837, 289 tons, or say an increase of 932 per cent; in 1847, 624 tons, or 216 per cent more; in 1857, 1,800 tons, which corresponds to an increase of 290 per cent; in 1867, 5,826 tons, or 322 per cent more; 1877, 9,215 tons, thus augmenting by 158 per cent; in 1887, 13,290 tons, or 144 per cent increase; in 1897, 21,256 tons, representing about 160 per cent more; and, finally, in 1907, 36,490 tons, or approximately an increase of 172 per cent.

Within the last decade, that is to say, from 1902 to 1911 (vide statistical statements =in fine=), the exportation rose gradually to 28,631 tons in 1902 and to 39,026 tons in 1909, the maximum ever reached so far, to descend immediately to 38,546 tons in 1910 and 36,547 tons in 1911.

Brazil has so far not had any serious competition to fear. It is true that the other producing countries in Central America, South Africa and Asia, send a considerable quantity of rubber on to the market, but this does not affect the Brazilian trade, because, besides being practically all of it of an inferior quality, such extra supply is not sufficient to occasion the harmful effects of an overproduction. It is curious to observe, that even within the last decade, the production of those regions which in 1901 was 21,547 tons increased even so far as to surpass the production of Brazil in the year of 1905, reaching then 35,428 tons; but it diminished as rapidly as it had increased and in 1911 we see it reduced to 23,747 tons. This decrease cannot be attributed to the effects of competition, for instance to the plantations of the Orient, whose production commenced to accentuate itself exactly in the year of 1905 and henceforward. As a matter of fact, competition should bring forth a fall in prices, but however, on the contrary, such did not happen, the quotations reaching in the years of 1909 and 1910 such extremes as had never been seen in the rubber market. It will be sufficient to point out, that the refined rubber of Pará, which is the Standard regulating type of the market and whose average annual price has been 3, 4 and even 5 shillings, went up in those years to 12s/6 per pound.

However, a new competitor did appear, which had to be taken into consideration, and which induced the Government of Brazil to adopt some measures tending to protect its great article of export. The considerable and methodical plantations of the =hevea brasiliensis= made in the peninsula of Malacca in Malasia and on the island of Ceylon, commenced to produce rubber, which it was predicted would within a few years, due to the enormous quantity produced at a low figure, get the mastery of the market.

These plantations, the initial experiments of which date from the year of 1876, with 70,000 seeds sent from the Tapajóz river, an affluent of the Amazon, by Wickham to the Royal Botanical Garden of Kew, have taken an enormous increment since the year 1896, till to-day, due to the results obtained which indicated beyond possible doubt the advantages of the cultivation of hevea, this in view of the constantly increasing price of the product and the new applications which day after day the rubber industry has opened up.

The cultivated-plantation rubber, which appeared on the market with 5 tons in 1901, was represented by 646 tons five years later and at the end of another equal period, by 12,000 tons. It is estimated that if nothing unforeseen happens to the contrary, its production in 1916 will be 70,000 tons, thus reaching the quantity which is at the present moment consumed each year by the necessities of the industry.

It is believed that by that time the inferior qualities furnished by Africa, Central America and even by Brazil, will gradually have disappeared from the market. In order to meet the consumption which, if progression that hitherto has taken place, continues, will then be of 98,603 tons, the production of Brazil and of the Orient together will surely render a quantity much superior to that demand.

The average cost per Kilo of fine Pará rubber in the valley of the Amazon is from 3$000 to 3$500; in India of 2$650; however, this difference should disappear under the operation of the Rubber Defence Act, which is inserted further on, and the possible augmentation of the price in the Orient, where manual labor will become dearer later on when all its plantations are in full exploitation, and by the consequent scarcity of labor, against which agriculturists are already commencing to struggle.

The industrial element still continues to give preference to the Brazilian rubber, this being better in quality, =nerve= and in elasticity—properties these which may probably be attributed to the process of curing, which is not employed in the Orient, or possibly to the meteorologic and climate conditions, the geological composition of the soil, etc. It is true that the quotation for planted rubber has been superior to that of wild rubber, but it is advisable not to forget, that while the former shrinks only 3 per cent, and has a much better appearance, the latter loses 18 per cent of its weight. The price difference is thus amply explained and when accounts are made up it is still the fine quality from Pará that is the better quoted.

THE INDIA RUBBER PROBLEM—MEANS SUGGESTED AND RESOLVED BY THE STATES

Threatened with losing the predominant position it has always occupied in the rubber market of the world, Brazil could not, without committing an economical suicide, remain inactive.

The time having come when native rubber would enter into competition with planted rubber, Brazil had to defend its interests by becoming equipped for the struggle, making the cost of its product cheaper in order to ensure its occupying an advantageous position in the market.

Many are the causes which at present contribute to the high cost of Brazilian rubber, but they may be united into three groups, as follows: 1st, expensive labour; 2nd, heavy transport tariffs; and 3rd, excessive export taxes.

The expensive labour is due to the scantiness of population in the Amazon valley, the want of foreign immigration to compensate it, and the high cost of food supplies.

The rubber-producing trees (seringaes) of the Amazon are exploited by the natives, whose number is but small, and by the immigrants from the eastern States who, fleeing from the droughts which periodically befall those States and attracted by the liberal profits offered by the extraction of rubber, go there in thousands every year. This current of immigration is, however, insufficient; a proper remedy for such a state of things would perhaps be foreign labour which still keeps back from the North because it only knows it through garbled information. The bad food and the indifference for all that concerns health conditions, contribute every year to the invaliding of a considerable number of men.

The extraction of India rubber being the occupation which pays best in the Amazon Valley, the pastoral industry, cattle-breeding and farming are altogether despised, so that all the articles of subsistence needed by the population, either come from the South of Brazil, burdened by cost of a long transport, or from abroad overloaded with high Brazilian Customs duties.

The heavy transport tariffs are due to the numerous difficulties of all sorts that thwart navigation in the affluents and sub-affluents of the Amazon river and to the greediness of ship-owners, encouraged by the absence of competition. On the other hand, the existence of a complete river system has made the Brazilian Governments disregard the necessity of establishing railways which, by shortening distances, might bind the different affluents of the great river to each other.

Finally, the excessive taxation imposed by the States of Amazonas and Pará on its almost only product of exportation is a consequence of the special conditions of life in that Brazilian region, which conditions we have just described. The Governmental and administrative system requires large sums for its maintenance, is unable to avail itself of any other sources of income because they hardly exist. The legislator has had to go on taxing the great product more and more.

In order to cheapen the product, besides removing the causes which have just been shown, two other far-reaching measures have been suggested; the adoption of a process for coagulation of the latex which might decrease the production of inferior rubbers, and planting on a big scale.

At the present moment the exportation of rubber from the Amazon is composed of 50 per cent of rubber “fina,” 10 per cent of “entre-fina,” 25 per cent of “sernamby,” and 15 per cent of “caucho.” Now, any process that can do away with or might at least diminish the percentage of entrefina and sernamby would be a means of cheapening the rubber of finer quality (fina). To apply the same activity to produce 70 or 75 Kilos of “fina” instead of 50 fina, 10 entrefina and 15 sernamby, is the same in reality as obtaining the first quality at a very much lower price. Such is the desideratum of the process of Dr. Carlos de Cerqueira Pinto, a Brazilian doctor who has lived for a great number of years among the rubber districts where he has made a most accurate study of the subject. The results hitherto attained are very satisfactory, the Government of Brazil having aided the inventor with a view to spreading his invention once its advantages have been definitely proven.

At the same time, the process of extracting the rubber from trees disseminated in the interior of the forests at a considerable distance one tree from the other, is against all principles of economy. The planting on a large scale, on the margin of the Amazon river, or of its big affluents, but in places of easy access, is an essential measure, especially seeing that the Government aims at maintaining for Brazil in future, the prominent position it now occupies in the trade. Therefore, whilst considering all the complex elements of the question thoroughly, a study had to be made of all the solutions presented. We shall now see what procedure was followed:

In August, 1909, a Congress of seringueiros (rubber gatherers), assembled in Acre with a view to studying and discussing the situation of the rubber trade. In a message addressed to the President of the Republic at the closing of the proceedings, the members of the Congress suggested, as chief measures, easy communications, roads, railway lines, subventioned lines of steamers, colonization promoted by the Government and a reduction in the export duty.

Later on, in the same year, the Pará Government enacted Laws Nos. 1,100 and 1,109 of the 5th and 6th of November, both of which have great bearing on the solution of this most important problem.

The first of said laws gives authority, in article 1st, to the State Government, to enter into agreements with one or more native or foreign companies, in regard to the plantation and exploitation of the seringueira (hevea brasiliensis) against the concession of the following favors:

a. The concession of vacant lands up to twenty thousand hectares with proper demarkations for the Company’s plantings.

b. Reduction in the export duty of planted rubber to the extent of 50 per cent in the first 10 years as from the date of the first exportation; of 40 per cent in the second decade; of 30 per cent thenceforward until completion of twenty years.

c. Reduction of 30 per cent in the tariffs of the Bragança railway and in the freights of the line of steamers subventioned by the State, during a term of twenty years, for planted rubber produced by the Company.

d. Transport free of charge by the Bragança railway and steamers under the States’ subsidy of all machinery and plant belonging to the Company and intended for the installation of its establishments; and of whatever colonists the Company may place in its premises as well as of seeds, manure plants and cattle.

e. An advance, by way of guaranteed interest, of 5 per cent per annum on the capital issued by the company holding the concession to the extent of one-half of the paid up capital.

Special paragraph.—This guarantee, whatsoever be the Company’s capital, shall not be paid on a sum exceeding £400,000 Sterling over and above £800,000 Sterling, or its equivalent in paper money.

The advances, by way of guaranteed interest, thus conceded, will be discontinued once the Company’s profits attain 6 per cent, and on exceeding 7 per cent the Company will start amortizing the sums loaned by the State to the extent of 5 per cent on the total sum advanced.

The concession of lands available will be made by way of emphyteusis for 99 years.

The Statutes will have to be approved by the Government, who will name one of the Company’s Directors and retain certain rights with a view to the due enforcement of the contract.

Article Second of the Law describes the Company’s obligations, which are as follows:

First. To plant at least twenty thousand rubber trees per year.

Second. To carry out instructions from the Agriculture Department of the State in the planting.

Third. To maintain a rural elementary school, with accommodation for the shelter of at least twenty destitute children, and a field of practical tuition of mechanical agriculture, experimental cultivation of tropical plants, experiments in manure, etc.

Fourth. Accessory planting of rice, maize, haricot beans, etc., improving the quality of same by mechanical means.

Fifth. Furnish accurate yearly statistics of the number of plantations made, their state and the general production of rubber and other articles.

Sixth. Use on the bags, boxes and other receptacles containing the goods produced, a trade-mark duly registered at the Board of Trade as prescribed by law.

Seventh. Allow the Government to control all the work carried out by the Company in such manner as the Government may think fit.

Complementary to the former, the Law of November 6th concedes prizes and other favors to the agriculturists of the State, who, by themselves or associations formed by them, should fulfil the conditions set forth in same.

The prizes are of five hundred mil réis for each plot of five hundred rubber trees properly planted; the favors consist of the distribution free of charge of chemical manure, seeds, plants, instructions and agricultural monographs, gratuitous tuition to all the laborer-planters, transport free by the Bragança Railway and steamers subsidized by the State, reduction of export duties, =etc.=

Lastly, Law No. 1,115, of the 8th November, 1909, affords protection to the rubber trees that are actually yielding, with a view to improving their production.

Article First authorizes the Government of the State to further the defence of the rubber industry as regards the latex and preparation of rubber, in order to prevent the destruction of the trees existing in the State, punishment being dealt to whomsoever manufactures the product by subversive means.

Article second provides a prize of 50 contos of réis paper money at most, to be awarded at the Government’s discretion, to the discoverer or inventor of some process of manufacturing or preparing rubber, which may afford undeniable advantages as regards its manufacture and reduces the inferior classes to a single standard of rubber “fina,” ensuring a high price for the article.

The State of Amazonas also, as per Law No. 675 of May 20, 1911, authorizes the Executive Power to concede any advisable favors to individuals or undertakings that may bind themselves to put up in Manáos factories for refinement of rubber by means of new and improved methods, so as to obtain a standard class of rubber for exportation.

The Commercial, Industrial and Agricultural Congress held at Manáos in February, 1910, resolved in its final conclusions to recommend to the Brazilian Government and the immediate neighboring Republics, the reforming of their freights, especially as regards the food supplies; grant favors to navigation; free rivers from obstructions; construct railways; create colonial centres; admit of the pressing and absolute necessity to plant rubber trees in the Amazon valley and open new fields of plantation; suggests the establishment of permanent exhibitions of a highly educational character; advises the rubber extractors not to give up the process of curing by smoke and condemns entirely the use of acids or alum in the coagulation, and calls attention to the question of the commercial classes of rubber which should be properly defined. Going into details it requests numerous favors for the agriculturists that may go in for planting hevea rubber trees, cacao and cereals, cotton and other products, and that prizes be granted to cattle breeders, experimental fields be opened, as also laboratories of analysis and a service be established for dealing with the yellow fever and paludinous fevers, etc.

Such an important matter could not be solved by half-measures; it was necessary and even indispensable to adopt a plan embracing all the solutions suggested and proclaimed as being elements of success, thus obtaining a united plan entailing some complexity in its execution, it is true, yet clear and simple in its combined purposes.

And this desideratum was achieved by the Federal Law No. 2,543 A of the fifth of January, 1912.

MEASURES ADOPTED BY THE FEDERAL GOVERNMENT—RIO DE JANEIRO CONGRESS OF RUBBER—REGULATIONS OF THE NEW RUBBER DEFENSE ACT

For a long time back the attention of the Brazilian Government has been drawn to the necessity of adopting a plan of defence for India rubber, which might solve in a practical and decisive manner the so-long-debated “problem of the North.”

In August, 1911, the Minister of Agriculture, after a close study, made with the aid of specialists and persons having full knowledge of that region of the country, drew up a project in the above sense and, recognizing the necessity of still hearing those who are most directly interested in the matter, convened a meeting of representatives of the State Governments, Commercial Associations and other Institutions which might lead to a perfect understanding of what was most advisable to do.

The first meeting was held on August 14, and the Government’s plan was hailed with great applause, the same being approved, with slight alterations, in the last session which took place on the twenty-second of the same month.

By Message of September 14, 1911, Marshal Hermes da Fonseca, President of the Republic, sent to the National Congress for approval, the plan duly elaborated; after being carefully studied by Congress it was approved and converted into Law, under No. 2,543 A and was sanctioned on January 5, 1912.

On April 17, 1912, Decree No. 9,521 was enacted with the Regulation for carrying out the measures and services provided for in the law of January.

The measures and services prescribed by Law No. 2,543 A of January, 1912, for the economic defence of rubber, regulated by Decree No. 9,521 of April 17, 1912, are as follows:

I. To encourage the rubber extractor and the cultivator of the principal rubber-producing trees.

II. To form industries for the refinement and manufacture of rubber articles.

III. To aid immigrants, both from the country and those who have recently arrived from abroad, and the workmen already established in the Amazon valley.

IV. To render transport easy and decrease the cost in the Amazon valley.

V. To install productive centres of food supplies in the Amazon valley.

VI. To hold three-yearly exhibitions in Rio de Janeiro, comprehending all that relates to the rubber industry of the country.

The measures contained in the law in regard to making agreements with the States which produce rubber “seringa,” with a view to decreasing the export duties and protecting the rubber trade, will be dealt with separately, and with regard to the definition and legalization of freeholds in the Federal Territory in Acre and the revision and consolidation of regulations concerning the coasting service of steamers (included in No. IV) special By-Laws will be drawn up which shall be published in due course.

* * * * *

The measures in reference to the first group and whose object is to encourage the extracting industry and plantation of the principal rubber producing trees are: First, reduction of the cost of tools and materials employed in the rubber trade; second, granting of prizes in money to the planters of the principal rubber trees; third, installation of experimental stations for the cultivation of rubber.

For the reduction in the cost of utensils and materials, free entrance is granted with exemption from any import duties, as well as to everything intended for the cultivation of the seringueira, caucho, maniçoba and mangabeira and the gathering-in and improving of rubber extracted from those trees; whether as regards the extracting industry or the plantation work.

These pecuniary premiums for encouraging the industry, will be conceded to all those who plant entirely anew, or who devote themselves to replanting; in the first case and for every group of 12 hectares, the premiums will be Rs. 2:500$000 when the planting is of “seringueira”; Rs. 1:500$000 when it treats of “caucho” or “maniçoba”; and 900$000 when it is mangabeira; in the second case and for every group of 25 hectares the premiums will be 2:000$000, 1:000$000 and 720$000 respectively. The minimum number of trees for the new plantations will be 250 per hectare for the seringueira and caucho, and 400 for the maniçoba and mangabeira; in the case of re-planting, the distance to keep between the trees should be from 6 metres to 6m50 for the first mentioned case and 5 metres for the second. In order to obtain the payment of the premium, it is requisite that the trees be well cared for, and that not more than 15 per cent are damaged or useless.

The subsidiary cultivation of alimentitious plants or of those useful for industrial purposes, will secure an annual gratuity corresponding to 5 per cent of the value of the principal premium.

For the cultivation of the seringueira, experimental stations will be localized in the Territory of the Acre, and in the States of Matto Grosso, Amazonas, Pará, Maranhão, Piauhy and Bahia and for the growing of the maniçoba conjointly with that of the mangabeira in the States of Piauhy, Ceará, Pernambuco, Bahia, Minas Geraes, S. Paulo, Goyaz, Paraná and Matto Grosso.

Each station will have an area of from 80 to 100 hectares, the land selected having to be suited to the climatic and agrological conditions exacted by the nature or quality of the plant to be cultivated.